Rulemaking Exercise: • Re the NPR involving USCG-2012-0779, it is fine for you to look at the NPR dated 9/10/13 to flesh out information about the rulemaking. The 11/2013 NPR is more truncated although you can get what you need from that and the comments. • Regulations.gov has a notice that it may “down intermittently” on Saturday so plan accordingly.
Agency policymaking • Agency Policy defined: General rules, principles or patterns that guide agency staff as it carries out daily functions. • During the delegation battles, SCT tried to figure out whether agencies could make policy. That battle is largely over – agencies can make policy. • But what other issues arise with policy-making: • What vehicles for agency policymaking exist? • What procedures apply to agency policymaking? • Why would an agency choose one policy-making vehicle over another? • Does the law constrain the choice of policymaking vehicles in some instances?
Policy-making vehicles & related constraints • We tend to think of policy-making as coming in one of two forms: • quasi-legislative forms (rules/rulemaking) or quasi-adjudicative forms (orders/adjudications) • The difference between these two policy-making forms is significant • differentprocedural requirements often attach to different forms of policy-making (rulemaking vs. adjudication). • There are even different definitionsof rulemaking & adjudication depending on whether the situation involves a constitutionalversus a statutory challenge This can raise very complicated issues where agency action can be a rulemaking with one set of procedural requirementsin one context and an adjudication withdifferent procedural requirementsin another context
Londoner & Bi-Metallic: rulemakings vs. adjudications procedural due process in constitutional challenges • Londoner (1908): BPW assessed tax on property along city street for purposes of paving a street. SCT said failure to provide oral hearing violated due process. • Bi-Metallic (1915): Tax Board increased taxes on all property in Denver pursuant to state law. SCT said failure to provide hearing did not violate due process. • Londoner raised due process concerns because it “involved a relatively small number of persons” who were “exceptionally affected, in each case, upon individual grounds.” • In other words, Londoner involved an adjudication rather than a rulemaking, so due process requirements attached. Key distinctions: • Rulemakings: general/prospective in application • Adjudications:particular/retrospective in application • So far we haven’t discussed what kind of procedures due process might require in adjudications – we will do that later.
APA definitions of rulemaking & adjudication – cases arising under federal statutory law • Rulemaking – the agency process for formulating, amending or repealing a rule (5 USC § 551(5)) • Rule – any agency statement of general or particular applicability and future effect designed to implement, interpret or prescribe law or policy [or procedure], including making or approval of rates or corporate structures (5 USC § 551(4)) • Adjudication – the agency process for the formulation of an order (5 USC § 551(7)) • Order – the whole or part of a final agency disposition [that results from something] other than rule-making, but including licensing. (5 USC § 551(6)) • How does the APA definition of a rule differ Londoner & Bi-Metallic? And why might that difference be important?
APA procedures required for rulemakings – a sample of the basics (more detail later) Formal – Sec. 553, 556 & 557 Informal – Sec. 553 Notice of Proposed Rule (“NPR”) – Sec. 553(b) Opportunity for Comment – Sec. 553(c) Concise Statement of Basis & Purpose for Final Rule – Sec. 553(c) • Notice of proposed rulemaking (§553(b)) • Right to submit evidence and to conduct cross-ex (§556(d)) • Initial decision by an ALJ, the agency or qualified agency employee (§556(b)/557(b)) • No ex parte contacts (§557(d)) • Decision based on findings of fact, supported by substantial evidence in the record and conclusions of law (§557(c)) • Decision is appealable to the agency head(s) (§557(b))
APA procedures required for adjudications – a sample of the basics (more detail later) Formal – Sec. 554, 556, 557 Informal – Sec. 555(e) Prompt notice shall be given of denial in whole or part of a written application . . . of an interested person made in connection with any agency proceeding. Unless the agency is affirming prior denial or it is self-explanatory, notice must contain brief statement of grounds for denial. • Notice of hearing (§554(b)) • Separation of investigatory and adjudication functions (§554(d)) • Right to submit evidence and to conduct cross-ex (§556(d)) • Initial decision by an ALJ, the agency or qualified agency employee (§556(b)/557(b)) • No ex parte contacts (§557(d)) • Decision based on findings of fact, supported by substantial evidence in the record and conclusions of law (§557(c)) • Decision is appealable to the agency head(s) (§557(b)) Organic Act reqm’ts
Choice of agency policy-making vehicles - MUST an agency use a certain policy-making vehicle? • Obviously, the vehicle used to make agency policy matters re the procedural constraints imposed: • Under the APA, formal adjudications/rulemakings require more procedural hoops than informal versions of same policy vehicles. • If a constitutional challenge, adjudications must meet due process. • But these are side effects of agency choice of policy-making vehicle. • They result from the agencies choice of vehicle, they do not dictate that an agency choose that particular vehicle to make policy • Tactical reasons re avoiding/using procedures might make an agency choose particular policy vehicles • Are there constraints on whether agencies can choose particular policy-making vehicles?
Nat’l Pet. Refiners Ass’n v. FTC – the facts • FTC has the authority to regulate under the FTCA: • Sec. 12 - false & deceptive advertising of food, drugs . . . (15 USC § 52) • Sec. 5 – unfair methods of competition affecting commerce & unfair or deceptive acts or practices in commerce (15 USC § 45(a)) • Sec 5(b) of the FTCA: When FTC has reason to believe that a person “has been or is using any unfair method of competition or unfair or deceptive act or practice in commerce . . .” it shall hold a hearing and ultimately issue a “cease & desist” order if it believes that person is engaging in deceptive practices • Sec. 6(g) of the FTCA: FTC has the power to “make rules and regulations for the purpose of carrying out the provisions of sections 41-46 & 47-58 of this title.” (15 USC § 46(g)) • FTC enacted a rule pursuant to § 6(g) stating that failure to post octane levels at gas pumps was a deceptive practice
Nat’l Pet. Refiners Ass’n v. FTC – the FTC’s regulation of octane postings • Does the FTC have the authority to regulate octane postings generally (regardless of the vehicle it chose to use)? • In what way is failure to post octane numbers potentially deceptive? • Could the FTC have regulated such postings without having rulemaking authority? What would that sort of regulation entail?
Nat’l Pet. Refiners Ass’n v. FTC – the FTC’s choice of policymaking vehicles • Why might the FTC have wanted to use rulemaking as the policymaking vehicle? What advantages does it have? • Why would gas stations prefer to have this issue raised on a case-by-case in adjudications (enforcement proceedings)?
Nat’l Pet. Refiners Ass’n v. FTC – the FTC’s authority to enact rules • Does the FTC have the power to enact rules pertaining to octane postings? • Sec. 5(b) could be interpreted as allowing decisions only through cease and desist proceedings. • But what does the language of Sec. 6(g) suggest as to the FTC’s powers? • How broadly should we read the FTC’s rulemaking authority? Do other relevant considerations argue against reading the text of Sec. 6(g) broadly? Should they matter? • Does the court’s decision signal a preference for rulemaking as a policy-making vehicle, even in the face of ambiguous language?